What is the weighted average cost?

Restaurants use a weighted average cost (WAC) inventory valuation method for calculating their per-unit food costs and supplier expenses. Using this inventory method to determine the actual cost of your inventory on hand doesn't track how much each item of inventory has been costing per delivery.

Restaurants use Weighted Average Cost to:

• Check their food cost
• Value their stock
• Track their profitability
• Calculate their inventory easily
• Help with purchasing management

How does the weighted average cost work?

When new inventory is purchased at various price points, a restaurant averages the total inventory cost divided by the total inventory quantities to arrive at an average unit cost. The restaurant then utilizes this average cost to perform inventory valuation and COGS calculations. The weighted average calculation would divide the total inventory cost by the total quantity.